State budget shortfall could raise Hubbard County taxes, senators and county staff warn

Hubbard County officials heard a legislative briefing from State Senators Green and Rekke and county staff on the state budget outlook and specific state proposals that could shift costs to counties.

County staff summarized a February 2025 state budget update showing a projected shortfall in the 2028–29 biennium. "We are looking at about a $6,000,000,000 deficit in 28–29," a county staff member said, and staff advised local leaders to expect multi‑year pressures that could require 5–6% increases for cost‑of‑living and benefit adjustments and larger, double‑digit levy impacts if several proposed changes pass at the state and federal level.

Why this matters: county officials could be required to pay newly shifted local shares for human services and other programs without corresponding state funding, forcing higher property levies. Presenters and senators repeatedly warned that those levy increases would be passed to residents on tax statements, even though taxes include city, school and township portions as well as the county share.

The briefing named several specific cost drivers and local impacts. County staff said a 10% county levy increase would raise the county portion of taxes on a $350,000 house by about $100 annually. The staff summary also included an estimate that changes to waiver and local share proposals could cost Hubbard County approximately $800,000 under one scenario.

PILT (Payments in Lieu of Taxes) and property sales were a central concern. County staff and senators discussed a proposed reduction in PILT funding that, according to the briefing, would lower a scheduled payment from about $103,000,000 to $68,000,000 by 2029. Senators and commissioners said the change would pressure affected counties; the briefing noted that Cook County and Lake of the Woods rely on PILT for roughly 20% of their levies, and that the next 10 counties (including Hubbard County) see smaller but material levy impacts.

Environmental and programmatic funding were also raised. County staff described the local consequences of cuts to aquatic invasive species (AIS) grants, saying county AIS grants leverage roughly $180,000 in local donations and township contributions, and that the effective local impact for Hubbard County could be closer to $450,000 if state funding were removed. Participants pointed to the Environmental Trust Fund — described in the briefing as holding about $2,000,000,000 — as one potential source for AIS funding if lawmakers choose to redirect funds.

Human services dominated much of the discussion. Senators and county staff described multiple new or increased local shares for adult waiver services, changes tied to the African American Family Preservation Act (AFPA), and workforce standard changes. County staff and commissioners said those shifts, combined with rate‑cut proposals and existing regulatory requirements, would squeeze providers and counties. One county estimate shared at the meeting put Hubbard County’s share of proposed waiver costs at roughly $800,000.

Panelists repeatedly emphasized the role of federal funding: county officials said a large share of Department of Human Services spending is federally funded (Medicaid/MA), and noted that if federal funding were reduced or if the federal government tightened compliance, state programs and county budgets would feel the impact.

Other bills and policy items discussed included: - Bonding and landfill permits: senators said a bonding bill is uncertain and that some bonding requests (including landfill demolition work prompted by MPCA permit changes) may not survive final negotiations. They argued that if the MPCA requires demolition landfill upgrades, the state should participate in funding. - Direct Care and Treatment (DCT) and Saint Peter facility: county leaders and senators said some state DCT facilities have uneven bed utilization and that counties bear high daily costs when placement options are limited. Speakers asked for better coordination between state inpatient facilities and county case managers. - Paid Family Medical Leave and other new programs: presenters said paid family medical leave would impose payroll taxes (the briefing cited a recent estimate of 0.88% currently modeled) and warned that actuarial estimates in other states have required additional state funding. Speakers asked lawmakers to consider delays or exemptions for small employers or rural counties. - Emergency‑declaration statute: several commissioners urged a return to a statute that requires legislative approval to continue a governor’s emergency declaration beyond an initial short period; they said the current language allows extended unilateral executive declarations and that most states require legislative continuation vote.

No legislative action was taken during the county meeting. The Board recessed the briefing and then approved a procedural motion to adjourn the session.